Is 'Made in the USA' coming back?

Kentucky manufacturing They are hiring, but new jobs at the Appliance Park plant pay much less per hour than the old ones

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Dirk Bowman watches with pride as we walk along an assembly line, while workers tweak and twiddle with lines of cylindrical water heaters at this General Electric plant in Louisville, Kentucky.

"This is my dream come true," he says.

"It is really hard, but it is completely gratifying. Two years ago this place was full of cobwebs, old steel and no lights. Now we are actually making a product competitively."

Mr Bowman has worked at this plant for nearly 30 years, and he spent too much of that time closing down lines and laying off workers as their jobs were shipped overseas.

But now the heaters are home from China, fridge doors are back from Mexico, and after a $1bn (£655m) investment, the plant is making new products for the first time in 55 years.

Economics, not patriotism

Some think "outsourcing" has now been revealed as a passing fad. The new fashion is "insourcing". Perhaps it is more realistic to regard the change as part of a global rebalancing, as Asia becomes richer.

While Mr Bowman, who is in charge of manufacturing, is pleased and proud, he is quick to stress the return home is about economics, not patriotism.

"What drove this is competitiveness. We came back because we can make this product here for about a tenth of the labour we use in China.

Start Quote

They go to the store and they see their product: 'Look at this - I made that'”

End Quote Rich Calvaruso

"So we are more efficient, we waste less time, and then we redesigned it so it is a better product."

Appliance Park Loop in Louisville, Kentucky is bigger than many towns, and it epitomises what manufacturing used to mean in America.

There are six large factories amid other, smaller buildings. The car park is a mile long, with its own traffic lanes to manage the flow of shift workers back in the 1970s when it employed 23,000. It has its own power plant, rail lines and post code.

Appliance Park Loop churned out the dishwashers and washing machines that kept the American Dream sparkling clean and freshly laundered. There is a convincing argument that the solid, well-paid jobs at places like this drove the suburban, consumer-rich version of the dream that blossomed in the 1960s.

Workers earned enough to support a family and live a life that had once been the sole province of those who wore suits and ties to work.

But it didn't last.

New economic reality

One reason for the decline of manufacturing in the US was outsourcing - jobs shipped overseas. And it stung the American psyche.

I found out on the election trail last year that you cannot talk long about the economy with most Americans before someone moans about jobs going to China.

Kentucky manufacturing at GE

Behind the story of jobs returning to the States is a new global economic reality.

As wages went up in China, they went down at the GE plant. The company cut a deal with the union: while existing workers would still get up to $26 (£17) an hour, new ones would be paid only $14 an hour.

The discovery of huge reserves of shale gas and oil in North America keeps energy costs low in the US even as they rise in Asia.

And as I watch vast lorries exit the gates of Appliance Park it is obvious that transport costs are lower here, especially when the rising price of oil pushes up shipping costs.

Rich Calvaruso is in charge of devising new ways to keep costs down and quality up.

Start Quote

Since the recovery, the 3.5 million jobs that have come back, only 2% are mid-pay jobs”

End Quote Julie Heath Economist, Cincinnati University

"It's the total cost of the product," he says.

"A lot of people just think about labour - that's what people thought about back in the '90s. But if you look at transportation, warranty costs, inventory, having all that stuff hanging around, it all adds cost."

"This is a relatively large product. If you make it thousands of miles away you have to ship here.

"We make this water heater and in four hours it is out the door. If it's made in China, it's like four weeks."

'A living, breathing thing'

Last year this plant doubled its workforce, hiring 6,000 more people.

And this isn't a one off - many other manufacturers are coming home.

President Barack Obama has set enormous store on the return of manufacturing.

"After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three," he said in his State of the Union speech.

Obama visited three US states to rally support for investment in manufacturing

"Caterpillar is bringing jobs back from Japan. Ford is bringing jobs back from Mexico. And this year, Apple will start making Macs in America again."

The next day he added: "I believe we attract new jobs to America by investing in new sources of energy and new infrastructure and the next generation of high-wage, high-tech American manufacturing."

But economist Julie Heath from Cincinnati University has a word of caution for those who believe the old days will return.

"Anytime you bring jobs back there is a positive effect on the American economy," she says. "The problem is they are a different kind of job. The jobs that are coming back are typically lower pay, sometimes lower benefits, than the jobs that were lost.

"Half the jobs lost in the recession were mid-pay jobs - jobs that could support a middle-class lifestyle. Since the recovery, of the 3.5 million jobs that have come back, only 2% are mid-pay jobs."

Kentucky manufacturing

Manufacturing may never be as important to the American economy as it once was, but it is a badge and symbol - a sobering one for countries like the UK that have largely ditched their ability to make stuff.

Surrounded by the hum of machines and rows of heaters being packed in big brown cardboard boxes, Mr Calvaruso speaks eloquently about why manufacturing matters.

"This is awesome to me," he says.

"The real thing that makes this exciting is to see the operators and see the smiles on their faces and their involvement. They go to the store and they see their product: 'Look at this - I made that'.

"And they're proud of that. Because it is more than just putting stuff together, it's thinking with your body and your mind. It's a living, breathing thing."

Mark Mardell Article written by Mark Mardell Mark Mardell North America editor

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  • rate this

    Comment number 216.

    MK in your twisted little world that may well be the case....but your world and reality are poles apart.
    I ask again, is it worth the money?

  • rate this

    Comment number 215.

    ref #214
    3 Minutes ago
    213 Poor little companies being exploited by the naughty much are you being it worth it?
    Read posts for a change. Unions are not worlers. Worlers do something, union are exploiters.

    Most workers hate unions , for good reason they serve no purposes except to fill fat hacks wallets.

  • rate this

    Comment number 214.

    213 Poor little companies being exploited by the naughty much are you being it worth it?

  • rate this

    Comment number 213.

    ref #209
    AKA Support Right to Treat Employees Like Disposable Office Supplies!
    Free employees from paying protection money and let companies decide to work without paying parasites

  • rate this

    Comment number 212.

    184. Killer Boots Man

    Yesterday I realised I can't remember the last time I received the correct item in working order. You almost always need a replacement and even then the quality is questionable.

    Hint: Read readers' reviews. Also try sorting them by "rating". You can easily spot the problem products. Some reviews are worthless but issues often surface repeatedly.

  • rate this

    Comment number 211.

    Having worked in US manufacturing for nearly 20 years I can say that many was resilient through the recession and seems to be as strong. I know several sectors where it's lower cost and better quality than buying from China and Asia. The economy as a whole suffers because it's too small a %age of GDP.

  • rate this

    Comment number 210.

    196. LucyJ

    Americans know that we can't rely on government, that its up to us to save ourselves and our ailing nation

    Maybe distracted democrats are a blessing after all! Jobs will come back based on global economic forces, the same reason for which they left.

    Now if only we could figure out how to accelerate that process without a 4-year wait.

  • rate this

    Comment number 209.


    Support Right to Work!

    AKA Support Right to Treat Employees Like Disposable Office Supplies!

  • rate this

    Comment number 208.

    Artwit 206: If so then why did Wall Street and the Koch brothers who supported 'rich old white guy' GOP candidate (Romney), get dusted by an electorate increasingly influenced by Hispanic and female voters?

    Lower paying (but not low-paying) jobs are better than no jobs, inflexible US unions killed US jobs and Mexican corruption caused abject poverty long ago. Bravo to new & better US unions.

  • Comment number 207.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 206.

    The corporate takeover of the US Government has been going on for 40 years, along with the war against the middle class, and labor unions, who created the large middle class. As long as Wall Street is in charge it will continue to be a race to the bottom in jobs and benefits with 1% feudal lords of equity and 99% serfs living in cardboard boxes, like they do in Mexico after US jobs moved there.

  • rate this

    Comment number 205.

    Lower paying jobs might not be good for the middle class, but they are good for the working poor. Well paying jobs get taken by middle-class workers with more employable skills; lower paying jobs get passed over by those workers letting lesser skilled workers take them. If you care more about the poor than the middle class (which you should), you should be happy about this.

  • Comment number 204.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 203.

    Now we need to remove the tax advantage(!) for moving jobs overseas.

  • rate this

    Comment number 202.

    Speaking of PC… Mark Mardell, I’m sorry you were stuck in Colorado talking to 91-year-old Republicans, instead of that same week reporting on Benjamin Carson at the National Prayer Breakfast. How very BBC-?

    Now I’m off to yoga – the best Indian import.

  • Comment number 201.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 200.

    I wonder when Obama will start saying We Built It. Then the Democrites will turn the slogan, too, of course.
    Last night I met a woman whose Sears Holdings QA Analyst job went to India in Nov. But I just found her job, or one like it, in Illinois.? The Dairy Queen has had $10/hr ad for a while. She could be a soda pump jockey, or move north. (Sarcasm.) There are still - some - tech-ish jobs here.

  • rate this

    Comment number 199.

    The brave new world of automation promised more leisure time and higher pay and better working conditions for the workforce forty or more years ago. What it has provided is higher profits for big business now paying disproportinately low taxes, unprecidented period of low wage inflation and persistant high unemployment which was acurately predicted at the time.

  • rate this

    Comment number 198.

    For me growing up my Dad helped build road pavers, construction equipment+when I would see such on the road I felt pride knowing that my Dad or some coworkers may have made such

    Also his manufacturing job was why my brothers+I all could go to college, why we had food on our table, why we are alive today

    If Made in USA doesn't come back, USA won't come back either
    Made in USA is our economy

  • rate this

    Comment number 197.

    Good news for USA indeed lets hope its a beggining of a trend to bring manufacturing home. For those calling for more UK deregulation of workers rights, health & safety, blaming those and the EU for the UKs dire economic performance Perhaps they could explain how it is that Germany's maunfactuering sector is so successful given that they are subject to similar perceived contraints???


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